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ATTACHMENT A

STATEMENT OF FACTS

This Statement of Facts is incorporated by reference

as part of the Deferred Prosecution Agreement, dated April

23, 2015, between the Fraud Section, Criminal Division, and

the Antitrust Division, of the United States Department of

Justice, and Deutsche Bank AG (“DB”). DB hereby agrees and

stipulates that the following information is true and

accurate. DB admits, accepts, and acknowledges that it is

responsible for the acts of its officers, directors,

employees, and agents as set forth below. Should the

Department pursue the prosecution that is deferred by this

agreement, DB agrees that it will neither contest the

admissibility of, nor contradict, this Statement of Facts

in any such proceeding. If this matter were to proceed to

trial, the Department would prove beyond a reasonable

doubt, by admissible evidence, the facts alleged below and

set forth in the criminal Information attached to this

Agreement. This evidence would establish the following:

I.

BACKGROUND

A. LIBOR and EURIBOR

1. Since its inception in approximately 1986, the

London Interbank Offered Rate (“LIBOR”) has been a

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benchmark interest rate used in financial markets around

the world. Futures, options, swaps, and other derivative

financial instruments traded in the over-the-counter market

and on exchanges worldwide are settled based on LIBOR. The

Bank of International Settlements has estimated that in the

second half of 2009, for example, the notional amount of

over-the-counter interest rate derivative contracts was

valued at approximately $450 trillion. In addition,

mortgages, credit cards, student loans, and other consumer

lending products often use LIBOR as a reference rate.

2. During the relevant period, LIBOR was published

under the auspices of the British Bankers’ Association

(“BBA”), a trade association with over 200 member banks

that addresses issues involving the United Kingdom banking

and financial services industries. The BBA defined LIBOR

as:

The rate at which an individual Contributor Panel bank could borrow funds, were it to do so by asking for and then accepting inter-bank offers in reasonable market size, just prior to 11:00 [a.m.] London time.

This definition had been in place since approximately 1998.

3. LIBOR rates were initially calculated for three

currencies: the United States Dollar, the British Pound

Sterling, and the Japanese Yen. Over time, the use of

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LIBOR expanded, and benchmark rates were calculated for ten

currencies, including the original three.

4. During the relevant period, the LIBOR for a given

currency was the result of a calculation based upon

submissions from a panel of banks for that currency (the

“Contributor Panel”) selected by the BBA. Each member of

the Contributor Panel submitted its rates every London

business day through electronic means to Thomson Reuters,

as an agent for the BBA, by 11:10 a.m. London time. Once

each Contributor Panel bank had submitted its rate, the

contributed rates were ranked. The highest and lowest

quartiles were excluded from the calculation, and the

middle two quartiles (i.e., 50% of the submissions) were

averaged to formulate the resulting LIBOR “fix” or

“setting” for that particular currency and maturity.

5. The LIBOR contribution of each Contributor Panel

bank was submitted to between two and five decimal places,

and the LIBOR fix was rounded, if necessary, to five

decimal places. In the context of measuring interest

rates, one “basis point” (or “bp”) is one-hundredth of one

percent (0.01%).

6. Thomson Reuters calculated and published the

rates each business day by approximately 11:30 a.m. London

time. Fifteen maturities (or “tenors”) were quoted for

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each currency, ranging from overnight to twelve months.

The published rates were made available worldwide by

Thomson Reuters and other data vendors through electronic

means and through a variety of information sources. In

addition to the LIBOR fix resulting from the calculation,

Thomson Reuters published each Contributor Panel bank’s

submitted rates along with the names of the banks.

7. According to the BBA, each Contributor Panel bank

had to submit its rate without reference to rates

contributed by other Contributor Panel banks. The basis

for a Contributor Panel bank’s submission, according to a

clarification the BBA issued in June 2008, was to be the

rate at which members of the bank’s staff primarily

responsible for management of the bank’s cash, rather than

the bank’s derivatives trading book, believed that the bank

could borrow unsecured inter-bank funds in the London money

market. Further, according to the BBA, a Contributor Panel

bank should not have contributed a rate based on the

pricing of any derivative financial instrument. In other

words, a Contributor Panel bank’s LIBOR submissions should

not have been influenced by its motive to maximize profit

or minimize losses in derivatives transactions tied to

LIBOR.

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8. The Contributor Panel for United States Dollar

(“USD”) LIBOR from at least 2003 through 2010 was comprised

of 16 banks, including DB. The Contributor Panel for Yen

LIBOR from at least 2006 through 2010 was comprised of 16

banks, including DB. The Contributor Panel for Swiss Franc

(“CHF”) LIBOR from at least 2007 through 2011 was comprised

of 12 banks, including DB. The Contributor Panel for Pound

Sterling (“GBP”) LIBOR from at least 2005 through 2010 was

comprised of 16 banks, including DB.

9. From at least 2005 to at least 2011, DB was a

member of the Contributor Panel for the Euro Interbank

Offered Rate (“EURIBOR”). During that time, EURIBOR was a

reference rate overseen by the European Banking Federation

(“EBF”), which is based in Brussels, Belgium. From 2005 to

2011, the EURIBOR Contributor Panel was comprised of

approximately 42 to 48 banks. EURIBOR was the rate at

which Euro interbank term deposits within the Euro zone

were expected to be offered by one prime bank to another,

at 11:00 a.m. Brussels time.

10. Thomson Reuters, as an agent of the EBF,

calculated and published the EURIBOR rates each day. Each

Contributor Panel bank submitted its contributed rate to

Thomson Reuters through electronic means, and then the

contributed rates were ranked. The highest and lowest 15%

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of all the quotes were excluded from the calculation, and

the remaining rates (i.e., the middle 70%) were averaged to

formulate the resulting EURIBOR fix for each tenor. The

published rates, and each Contributor Panel bank’s

submitted rates, were made available worldwide through

electronic means and through a variety of information

sources.

11. Because of the widespread use of LIBOR, EURIBOR,

and other benchmark interest rates in financial markets,

these rates play a fundamentally important role in

financial systems around the world.

B. Interest Rate Swaps

12. An interest rate swap (“swap”) is a financial

derivative instrument in which two parties, called

counterparties, agree to exchange interest rate cash flows.

If, for example, a party has a transaction in which it pays

a fixed rate of interest but wishes to pay a floating rate

of interest tied to a reference rate, it can enter into an

interest rate swap to exchange its fixed rate obligation

for a floating rate one. In the example above, Party A

would pay a fixed rate to Party B, while Party B pays a

floating interest rate to Party A indexed to a reference

rate like LIBOR or EURIBOR. In other words, Party B’s

interest payments to Party A are variable and change based

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on the movements in LIBOR or EURIBOR. There is no exchange

of principal amounts, which are commonly referred to as the

“notional” amounts of the swap transactions. Interest rate

swaps are traded over-the-counter in that they are

negotiated in transactions between counterparties and are

not traded on exchanges.

C. Forward Rate Agreements

13. Similar to an interest rate swap, a forward rate

agreement (“FRA”) is an agreement between counterparties to

exchange interest rate payments on a notional amount

beginning at a future date and ending on some other future

date. The interest rates are determined at the time of

contracting. FRAs are commonly used to hedge future

interest rate fluctuations. If, for example, a party wants

to hedge against the risk of rising interest rates, that

party can enter into a FRA at a fixed rate, guaranteeing

the fixed rate at the future end date. Meanwhile, if a

party desires to hedge against the risk of a decline in an

interest rate, they may enter into a FRA at a floating

rate, indexed to a reference rate like LIBOR or EURIBOR.

FRAs are also utilized by speculators who in essence bet on

future changes in interest rates. Like swaps, there is no

exchange of notional amounts; instead, the only amount

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exchanged is the difference between the contracted interest

rates.

D. DB

14. DB is a financial services corporation with

headquarters located in Frankfurt, Germany. DB has banking

divisions and subsidiaries around the world, including in

the United States, with its United States headquarters

located in New York, New York. From 2006 to 2011, one of

DB’s business units was Global Finance and Foreign Exchange

(“GFFX”), which in turn consisted of Global Finance and FX

Forwards (“GFF”) and Foreign Exchange (“FX”). The GFFX

unit had employees in multiple legal entities associated

with DB, and multiple locations around the world including

London, Frankfurt, and New York. DB, through its GFFX

unit, employed traders in both its Pool Trading groups and

its Money Market Derivatives (“MMD”) groups.1

15. DB’s pool traders engaged in, among other things,

cash trading and overseeing DB’s internal funding and

liquidity. In addition, DB’s pool traders traded a variety

of financial instruments, some of which, such as interest

1 While GFFX was the primary business unit involved in the conduct addressed in this Statement of Facts, traders from another business unit participated as well. For instance, Trader-19, worked in DB’s Rates group beginning in 2008 as a DB EURIBOR trader in London who traded a significant amount of interest rate derivative products linked to EURIBOR during the relevant time period. Trader-19 made requests of the EURIBOR submitters similar to those made by other derivatives traders of their relevant submitters.

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rate swaps and forward rate agreements, were tied to LIBOR

and EURIBOR. DB’s pool traders were primarily responsible

for formulating and submitting, on a daily basis, DB’s

LIBOR and EURIBOR contributions. DB’s MMD traders were

responsible for, among other things, trading a variety of

financial instruments, some of which, such as interest rate

swaps and forward rate agreements, were tied to LIBOR and

EURIBOR. Both the pool traders and the MMD traders worked

in close proximity and reported to the same chain of

management. From approximately 2007 until 2011, DB’s GFF

unit was managed by its global head, Senior Manager-1.

II.

DB’S MANIPULATION OF LIBOR AND EURIBOR SUBMISSIONS

16. From at least 2003 through at least 2010, DB

derivatives traders requested and obtained benchmark

interest rate submissions that benefited their trading

positions. These derivatives traders requested that the DB

LIBOR and EURIBOR submitters make benchmark interest rate

submissions that would benefit the traders’ trading

positions, rather than rates that complied with the

definitions of LIBOR and EURIBOR. These derivatives

traders either requested a particular LIBOR or EURIBOR

contribution for a particular tenor and currency, or

requested that the rate submitter contribute a higher,

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lower, or unchanged rate for a particular tenor and

currency. Derivatives traders made these requests through

in-person conversations and electronic messages. Among the

multiple benchmarks at times affected by DB’s scheme were

USD, Yen, CHF, and GBP LIBOR, as well as EURIBOR. In

addition to manipulating its own submission, certain

traders at DB also agreed with traders at other banks to

manipulate Yen LIBOR and EURIBOR in a coordinated way.

A. USD LIBOR

17. The global market for financial products linked

to USD LIBOR is the largest and most active derivatives

market in the world. Many of these products are traded in

the United States and involve U.S.-based counterparties.

Additionally, USD LIBOR is the variable rate for many forms

of consumer debt such as mortgages, credit cards, and

student loans.

18. From at least 2003 through at least 2010, in

London, New York, Frankfurt, and elsewhere, numerous DB

employees regularly sought to manipulate USD LIBOR to

benefit their trading positions and thereby benefit

themselves and DB.

19. During most of this period, traders at DB who

traded products linked to USD LIBOR were primarily located

in London and New York. DB’s USD traders in London

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reported to Manager-1, a USD pool trader who supervised the

USD pool trading desk and in 2009 had supervisory

responsibilities over all of DB’s GFF unit in London.

Manager-1, along with a more junior USD pool trader,

Submitter-1, was responsible for submitting USD LIBOR rates

on behalf of DB. Manager-1 and Submitter-1 also traded

derivative products tied to USD LIBOR. In fact, Manager-1

was one of the bank’s largest volume USD derivatives

traders. At times, between 2005 and 2007, DB’s London

office also employed two additional pool traders,

Submitter-2 and Submitter-3, who traded, among other

things, financial products tied to USD LIBOR. At times,

these pool traders also submitted DB’s USD LIBOR

contribution as back-up submitters. Throughout the

relevant period, DB’s London office also had two

derivatives traders on its MMD desk who primarily traded

USD LIBOR-based derivative products: Trader-1 and Trader-2.

Trader-1 and Trader-2 sat next to Manager-1 and Submitter-

1, DB’s USD LIBOR submitters, and both reported directly to

Manager-1. Manager-1 reported directly to Senior Manager-

1. Trader-3, the most profitable derivatives trader at DB

during the relevant period, who in 2009 became the head of

DB London MMD desk, also traded a substantial volume of

financial products tied to USD LIBOR despite primarily

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being a Euro trader. Trader-3 reported directly to Senior

Manager-1.

20. During the same time, DB had a MMD desk in New

York that traded derivatives products tied to USD LIBOR.

This group consisted of, among others, Manager-2, the head

of DB’s New York MMD desk between 2005 and 2007, and

Trader-4, a derivatives trader who reported to Manager-2

during Manager-2’s tenure at DB. Between 2005 and 2006,

DB’s New York MMD desk employed Trader-5, and at least one

junior trader, Trader-6. Manager-2 reported directly to

Manager-3, the head of DB’s GFF unit in the Americas.

After Manager-2 left DB in early 2008, Trader-4 reported to

Manager-3 and Trader-3. In addition to a MMD desk, DB also

operated a pool trading desk in New York. This group

consisted of, among others, Trader-8 who occasionally

traded USD LIBOR-based derivative products. Throughout the

relevant period, at least one pool trader in DB’s Frankfurt

office, Trader-9, also traded financial products tied to

USD LIBOR.

21. Consistent with DB’s plan to facilitate

information sharing between pool traders and derivatives

traders, throughout the relevant period, DB USD LIBOR

submitters in London sat within feet of the USD LIBOR

traders. This physical proximity enabled the traders and

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submitters to conspire to make and solicit requests for

particular LIBOR submissions. Moreover, Manager-1 both

supervised the USD submission process and was one of the

bank’s largest volume USD derivatives traders, and the USD

submitters had access to his book and were aware of

Manager-1’s positions. In addition, from as early as 2005

through at least 2011, Senior Manager-1, the global head of

DB’s GFF unit from 2007 until 2012, led weekly, global

conference calls in which all DB MMD and pool traders from

around the world were expected to participate and discuss

the market, risk, and their respective trading positions.

22. From 2003 until 2008, USD LIBOR-based derivatives

traders made on average weekly verbal requests and

occasional written requests for DB’s USD LIBOR submissions

that were typically accommodated. The purpose of the

requests was to manipulate the ultimate rate to the benefit

of DB traders’ positions, conduct which was inconsistent

with the definition of LIBOR. Moreover, DB’s USD LIBOR

submitter would not simply alter one or two of the tenors

for DB’s daily USD LIBOR submissions. Instead, when the

request was for a particular tenor, such as 3 month USD

LIBOR, Submitter-1 often altered the other tenors so that

the manipulation was not conspicuous. In other words, a

request for a change in one DB USD LIBOR tenor, when

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accommodated, often resulted in a change to the bank’s

submission for most tenors on that day.

23. Also in an effort to conceal the manipulation and

make it less conspicuous, Submitter-1 kept his submissions

within or near a range he felt could be reasonably

justified by market conditions. In other words, Submitter-

1 would choose the lower or higher end of the range that

would not look conspicuous, based on trader requests, but

he typically did not exceed a reasonable range because he

did not want the manipulation to be noticeable.

24. In 2008, the nature of USD LIBOR manipulation

changed because of the financial crisis. During the

financial crisis, derivatives traders at DB employed a

trading strategy that bet on the widening of the spread

between 1 month, 3 month, and 6 month USD LIBOR, among

other currencies, that would result from the dislocation of

financial markets. Traders at DB used this strategy from

2008-2009 and the bank profited substantially from its

success. On almost every day during this time, Submitter-1

altered DB’s USD LIBOR submissions to align with the needs

of this trading strategy, i.e. persistently low 1 month and

high 3 and 6 month USD LIBOR submissions. If DB’s USD

LIBOR submissions did not align with the trading strategy,

then the DB USD derivatives traders – seated nearby

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Submitter-1 and, at times, Senior Manager-1 – complained to

Submitter-1.

25. In addition to the frequent verbal requests, a

number of written communications highlight how DB attempted

to, and at times did, manipulate USD LIBOR. At times,

these written requests came from traders who were located

in New York or Frankfurt or when certain London-based

traders were out of the office on a particular day. The

following communications are examples of these types of

written requests.

26. On March 22, 2005, Submitter-1 informed Trader-8,

a trader in New York, in an electronic chat, that he would

be able to alter his LIBOR submissions to favor Trader-8’s

trading positions:

Submitter-1: if you need something in

particular in the libors i.e. you have

an interest in a high or a low fix let

me know and there’s a high chance i’ll

be able to go in a different level.

Just give me a shout the day before or

send an email from your blackberry

first thing.

Trader-8: Thanks – our CP guys have been looking

for it a bit higher – not a big deal.

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27. On September 21, 2005, Trader-3 replied to one of

Submitter-1’s daily emails which predicted where USD Libor

would fix. In his reply, Trader-3 stated “LOWER MATE LOWER

!!” Submitter-1 replied “will see what i can do but it’ll

be tough as the cash is pretty well bid,” indicating that

the rate may increase amidst an active cash market. Shortly

thereafter, Trader-3 responded: “[Bank A] IS DOIN IT ON

PURPOSE BECAUSE THEY HAVE THE EXACT OPPOSITE POSITION – ON

WHICH THEY LOST 25MIO SO FAR – LET’S TAKE THEM ON.”

Submitter-1 replied, “ok, let’s see if we can hurt them a

little bit more then.”

28. In another example, on September 26, 2005,

Manager-1 solicited requests from Trader-1, a London-based

MMD trader, in an electronic chat:

Manager-1: libors any requests?

Trader-1: HIGH FREES, LOW 1MUNF

Manager-1: what levels?

29. As another example, on February 24, 2006,

Manager-1 and an MMD trader, Trader-3, asked Submitter-1 to

push DB’s 1-month USD LIBOR submission as low as possible.

After a broker had informed Manager-1 that USD LIBOR would

probably be around 60.5, Manager-1 forwarded the email

message to Trader-3, Submitter-1, and Trader-1, asking

Submitter-1 to “Push for 60 [Submitter-1].” Trader-3 then

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pushed further, “or even 58 if u can Coffee on me.”

Submitter-1, in reply to both Manager-1 and Trader-3,

stated, “ok right now we’re looking like 60.5 given what

people are saying. Will work on it all morning.”

30. Similarly, Trader-9, who was located in

Frankfurt, also requested that DB’s USD LIBOR submitters in

London manipulate USD LIBOR submissions. For example, on

March 28, 2007, Trader-9 made a request of Manager-1, in an

electronic chat, “I WOULD NEED A HIGH 3 MTS LIBOR TODAY,

BUT I THINK YOU DO TOO!!” to which Manager-1 replied with a

suggestion “35?” Trader-9 then expressed his agreement and

appreciation “YEP PSE.”

31. In an example of how a request altered DB’s USD

LIBOR submission, Trader-1 asked for a high submission from

Submitter-2, in an electronic chat, who was setting USD

LIBOR on that occasion:

Trader-1: can we have a high 6mth libor

today pls gezzer?

Submitter-2: sure dude, where wld you like it

mate ?

Trader-1: think it shud be 095?

Submitter-2: cool, was going 9, so 9.5 it is

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Trader-1: super – don’t get that level of

flexibility when [Manager-1] is in

the chair fyg!

32. DB’s USD LIBOR traders in New York also made

requests of the bank’s USD LIBOR submitters in London, and

were actively encouraged to do so by their supervisor,

Manager-2. For example, on November 28, 2005, Manager-2

and Manager-1 discussed, in email messages, Manager-2’s

present trading strategy and his need for a higher 1-month

rate and Manager-1 prompted Manager-2 to keep Manager-1

informed. Then, on November 29, 2005, Manager-1 confirmed

that they had taken Manager-2’s request into account, in an

email, “looking like 29 in 1 mth libor – we went in 295 for

u.” Similarly, on August 12, 2007, Manager-2 asked

Manager-1 and Submitter-1, in an email, “If possible, we

need in NY 1mo libor as low as possible next few days….tons

of pays coming up overall….thanks!” Submitter-1 then

agreed to try and help, “Will do our best [Manager-2].”

Three days later, on August 15, Submitter-1 wrote, in an

email, that he was still keeping one month USD LIBOR low,

noting “1m libor looking like 57 today [Manager-2],” to

which Manager-2 replied, “Thanks [Submitter-1], you are the

man!”

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33. Trader-4, who was in New York, made requests of

DB’s USD LIBOR submitters in London to benefit his trading

positions. For example, on March 20, 2006, Trader-4 sent a

USD LIBOR request, in an email, to Submitter-1, “Hi

[Submitter-1] Regarding Mondays 3mLibor, MMD NY is

receiving 3mL on USD 6.5 Bn so hoping for higher 3mL.

Cheers [Trader-4].” Similarly, on April 11, 2006, Trader-4

sent an email request to Submitter-1, “Hi [Submitter-1] FYI

I am receiving 3mL on 5.5 Bn of the April 12 fixing so a

higher 3m Libor on Wed morning would help me. Regards

[Trader-4].” Submitter-1 then passed along the request to

Manager-1, in an email, noting “Hi [Trader-4], I’m off

today but I’ll pass the message on to [Manager-1]. Thanjs.”

Submitter-1 passed the request along one minute later.

Again, on July 20, 2006, Trader-4 told Submitter-1, in an

email, “FYI I’m short (paying 1mL) on 6bn of the 1mL tomw

in case you have a chance to make it lower” and Submitter-1

responded, “leave it with me on the 1m.”

34. Trader-5, another MMD USD LIBOR trader in New

York likewise made a request. On May 17, 2006 Trader-5

sent a request, in an email, to Manager-1, “Hi [Manager-1],

hope you’ve been well. If you can help we can use a high 3m

fix tom,” to which Manager-1 replied to Trader-5 and

Submitter-1, “[Trader-5], I’m off but [Submitter-1] is your

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libor man [] [Submitter-1] could you take a look at 3s

libor in the morning for [Trader-5].” Submitter-1 then

agreed to accommodate the request, replying “Will do

chaps.” The following morning after he submitted DB’s

contribution, Submitter-1 wrote to Trader-5, in a chat,

“morning [Trader-5], I went in at 19+ for the 3m libor, as

you’ll see it almost manage to reach 19.”

35. Having DB’s USD LIBOR pool traders in London both

submit LIBOR and trade financial products tied to USD LIBOR

presented a conflict of interest that contributed to the

manipulation of USD LIBOR submissions for the benefit of

the submitting traders. For example, when Manager-2 from

New York requested of Submitter-1 and Manager-1, in an

email, that “3mo Libor be as high as possible Thursday and

Friday, if you see the market higher” on November 24, 2005,

Submitter-1 replied, “[Manager-2], we’ve gone in relatively

neutral as a high 3s doesn’t suit london at the moment.

Hope that’s ok.” Manager-1 also responded separately to

Manager-2’s email and cc’d Submitter-1, “Who asked low,

[Trader-1] and [Submitter-3]?” Manager-2 responded that

“[Trader-21] in rates had 12 yards[1] today and tomorrow.”

Trader-21 was a USD Libor trader in New York. In a

separate, related email conversation between Submitter-1

and Manager-1 about Manager-2’s request, Submitter-1

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admitted to Manager-1 that he “…asked [Trader-1] this

morning so went neutral. It’s fence sitting I know but

better to try to keep both parties somewhat on-side.” Soon

after this comment to Manager-1, Submitter-1 wrote to

Manager-2, with Manager-1 cc’d, “I’ll speak to [Trader-1]

again tmrw and see if we can get something sorted…”

B. EURIBOR

36. The market for derivatives and other financial

products linked to benchmark interest rates for the Euro is

global and is one of the largest and most active markets

for such products in the world. A number of these products

are traded in the United States – such as Euro-based swaps

contracts traded over-the-counter – in transactions

involving U.S.-based counterparties.

37. From at least as early as 2005 through at least

2010, in London, Frankfurt, and elsewhere, numerous DB

employees engaged in regular efforts to manipulate EURIBOR

to benefit DB’s trading positions and thereby benefit

themselves. The evidence revealed at least hundreds of

instances in which DB employees sought to influence

benchmark rates. In furtherance of these efforts to

manipulate Euro benchmarks, DB employees used two principal

and interrelated methods:

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a) internal requests within DB by derivatives traders for

favorable EURIBOR submissions; and

b) communications with derivatives traders at other

Contributor Panel banks.

Details and examples of this conduct are set forth below.

1) Manipulation within DB of its EURIBOR Submissions

38. Throughout most of the relevant period, traders

in DB’s GFFX unit trading products linked to EURIBOR were

located primarily in London and Frankfurt. Pool traders in

DB’s GFFX unit in Frankfurt determined DB’s submission to

the EURIBOR panel. Until the end of 2006, DB’s Frankfurt’s

pool trading was headed by Senior Manager-6. After 2006,

it was headed first by Manager-4 and later by Manager-5.

During most of that time, the head of pool trading in

Frankfurt reported to the GFF global head, Senior Manager-

1. Manager-5, a senior pool trader who became the head of

GFFX in Frankfurt in 2010, was responsible for DB’s EURIBOR

submission along with two other Euro pool traders,

Submitter-4 and Submitter-5. In addition to determining

DB’s EURIBOR submission, all three of these pool traders

traded products tied to EURIBOR.

39. Trader-3, who became the global head of MMD in

London in 2009, was a significant trader of EURIBOR-based

derivative products at DB. Trader-3’s trading profits

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earned him substantial performance bonuses, including a

bonus of nearly 90 million pounds sterling in 2008.

Trader-3’s profits also gave him substantial influence at

DB and in the industry generally. Trader-10 was a junior

MMD trader in London working under Trader-3 since 2003.

Although Trader-3 and Trader-10 traded derivative products

tied to a number of benchmark rates and currencies,

including USD-LIBOR, the majority of their trading was in

EURIBOR-based instruments.

40. Instances of manipulation of DB’s EURIBOR

submissions within DB date back at least to 2005, and

involve DB pool traders submitting rates intended to

benefit their derivative trading positions, as well as pool

and MMD traders requesting other pool traders to submit

rates that would benefit the requesting traders’ positions.

Pool traders also regularly solicited requests for

submissions from other Euro traders by asking them what

EURIBOR submission would be most beneficial to their

trading positions. On many occasions throughout the five

year period, the DB pool traders accommodated the

derivatives traders’ requests.

41. From at least early 2005, DB’s Euro traders were

engaged in active communication with DB’s EURIBOR

submitters in Frankfurt to manipulate DB’s EURIBOR

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submissions. For instance, on March 9, 2005, Trader-3

asked Senior Manager-6, in an electronic chat, if he could

push down the 3 month EURIBOR in March:

Trader-3: [Senior Manager-6] PLS

Senior Manager-6: YES

Trader-3: HIHI GOOD MORNING

DO YOU THIK YOU CAN PUSH 3MTH

DOWN A LITTLE TO GET AN 87 OR

HIGHER FIX ON MARCH? DOES IT

SUIT YOU AS WELL? (

42. As another example, on February 29, 2008, in an

electronic chat, Trader-3 requested favorable EURIBOR

submissions from Submitter-5 in response to a request for

preferences:

Submitter-5: [Trader-3], you still need the

high 6m fxg for the trade you

wrote last time?

Trader-3: yes please [Submitter-5] every day

if possible and especially in

march where we have a lot of 6mth

fixings

Submitter-5: ok

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43. A few days later, on March 5, 2008, Trader-3

reiterated his request, in an electronic chat, for a high

six month fixing to Submitter-5:

Trader-3: [Submitter-5] we need very high

6mth please all month

Submitter-5: its due to the position described

last time?

Trader-3: yes please

44. On March 7, 2008, Trader-3 called Manager-5

regarding the six month fixing on the March 2008 IMM date.

Trader-3: so basically we need high 6 month

Manager-5: sure, you will get high 6 month

Trader-3: especially on the IMM date.

Manager-5: which rate do you like?

Trader-3: 4.80?

45. On many occasions, Trader-3’s junior trader,

Trader-10, requested favorable EURIBOR submissions from

DB’s submitters in Frankfurt. For example, on January 23,

2007, Trader-10 requested a favorable submission from

Submitter-4, in an electronic chat:

Trader-10: [Manager-5] pls

Submitter-4: Hihi he is on holiday, may I help

26

Trader-10: Hi [Submitter-4], [Trader-10]

here.. could we pls ask you to put

low 1m fixing today please

Submitter-4: hahahahh sure, I have just written

[Trader-3] a bbg asking whether u

have any preferences for the

fixings. We have only small

xposure there so sure we can put

in a 60 fix in the 1m

Trader-10: thx vmuch [Submitter-4] we need

evry penny we can get atm the ee

it’s a bit tough to make money

46. On many occasions, DB’s EURIBOR submitters in

Frankfurt affirmatively solicited requests for upcoming

EURIBOR submissions from Euro derivatives traders in

London. For example, on November 30, 2006, Submitter-4

asked Trader-3, in an electronic chat, about his

preferences for upcoming submissions and Trader-3 responded

with information about what would most suit his trading

positions:

Submitter-4: Bonjour Monsieur, I assume that u

have continued interest in high

1me fixings, right?

27

Trader-3: bonour [Submitter-4] not today

actually , today we are paying

libor in 7bio, so a low 1s if

possible – what do u think of this

market ??

47. DB’s EURIBOR submitters in Frankfurt also talked

about influencing EURIBOR through their submissions, and

how they took requests from traders in London into account.

For example, on April 3, 2007, Submitter-4 informed

Manager-5, in an email, that he was moving up DB’s three

month EURIBOR submission to help London traders, noting:

Hi buddy, can you take a look at the 3m fixing. We already fixed 3.93 last week and now we are back at 3.92. The guys in London must think we are not going to manage to drive the fixing [rate] up. It shouldn’t make any difference whether we have a passive fixing or not. If we want to drive it up we must permanently fix high and offer on the cash market.

48. As another example, on May 14, 2007 Submitter-4

communicated, in an electronic chat, to Manager-5 Trader-

3’s key positions and trading strategies. At this time, he

also communicated what fixing would best promote those

positions:

please talk to [Trader-3] when you get a chance about a few things. He always has a few specific core positions that I have already spoken to him about. For

28

instance he sells 1y eonia swap buys 1 y 12x1 swap position is then delta neutral and he gets the 1ME and pays EONIA in return. That's why he is always interested in a low EURIBOR1mE fixing. Or he gets forward spreads on futures cheaply and then tries to drive up the fixing or even to push it down. Year-end spreads, they’re cheap throughout the year.

49. At times, Trader-3 and DB Euro traders in

Frankfurt, including Submitter-4, also discussed trading

strategies predicated on their ability to influence the

EURIBOR fixings in favor of their trading positions. For

example, on September 7, 2006, Submitter-4 outlined such a

strategy to Trader-3, in an electronic chat:

Ok here we goi – we all know that we have limited ability to impact the cash market exept of sometimes. Naturally we can not give cash in size due to bs limits but we can take in cash without restrictions. Since DB has a good name in the market we suhd be able to rise some size. This impact becomes even bigger when we do this in times when the cash market is even thiner than normal (ie. Year end). . . . Target tenors would be 1m and 3m. I am wondering wether its possible to build up fra-eonia spread throughout the year at decent levels and blow up the spread in Dec.

Over the next days, September 8 through 11, Submitter-4

further shared this strategy with his managers, Senior

Manager-6 and Manager-5, in an electronic chat, informing

them that “total profit possible EUR 2mn.”

29

50. Having DB’s Euro pool traders in Frankfurt make

DB’s EURIBOR submissions and trade financial products tied

to EURIBOR presented a conflict of interest contributing to

the manipulation of EURIBOR submissions for the benefit of

the submitting traders. For example, on October 12, 2005,

Trader-10 attempted, in an electronic chat, to influence

DB’s EURIBOR submissions and was rebuffed because DB’s

EURIBOR setters in Frankfurt had to first consider what

submission would most benefit their positions:

Trader-10: Good morning [Submitter-4],

[Trader-10] here.. could we please

ask you to put in low 1m fixing

pls

Submitter-4: Difficlt, think [Senior Manager-6]

wnarts it [] on the high side

Trader-10: Oh no!! But ladies first no ;))?

Submitter-4: First come first serve.

Trader-10: Exctly.. And we have been begging

you for last two month!!

Submitter-4: But u dont sign my bonus right?

Trader-10: Hahah hmmm.. Unfortunatly not…

In other words, DB’s EURIBOR submitters in Frankfurt took

their supervisor’s positions into account when making DB’s

EURIBOR submissions.

30

51. Moreover, pursuant to agreements with Euro

traders at other panel banks, Trader-3, and Trader-10 on

his behalf, made requests of DB’s EURIBOR submitters for

favorable EURIBOR submissions to benefit their trading

positions and those of the traders at other Contributor

Panel banks as described below.

2) Interbank Coordination of EURIBOR Submissions

52. From at least as early as June 2005 through at

least October 2008, certain DB Euro traders and Euro

traders at other Contributor Panel banks agreed to request

that their respective EURIBOR submitters contribute EURIBOR

submissions to benefit their trading positions. During

that time, DB, through Trader-3, engaged in efforts to

manipulate EURIBOR that often involved efforts to

coordinate trading strategies with EURIBOR-based

derivatives traders at a number of financial institutions.

Other individuals and banks involved in the agreement were

Trader A-1, a derivatives trader at Barclays, Trader CD, a

derivatives trader at Bank C and later at Bank D, Trader E-

1 of Bank E, Trader F-1, a derivatives trader at Bank F,

Trader G-1, a derivatives trader at Bank G, and Trader H-1,

a derivatives trader at Bank H. Periodically, these

traders requested that their respective Contributor Panel

banks’ EURIBOR submitters contribute EURIBOR submissions to

31

benefit the other traders’ trading positions when doing so

would not conflict with their own trading positions.

53. Trader-3’s efforts to coordinate EURIBOR

submissions with certain other Contributor Panel banks goes

back to at least mid-2005. For example, on July 6, 2005,

Trader-3 communicated with Trader CD, via electronic chat,

in an effort to manipulate DB’s EURIBOR submissions:

Trader CD: where DB 3s fixing today will u

guys finally deliver?

Trader-3: where u puttin the fix?

Trader CD: 13? Guess still 12 [Bank C]

Trader-3: we’ll put in 12 today amigo

Trader-3 then relayed this request to DB’s EURIBOR

submitters, in an electronic chat, on the same day:

Trader-3: hihih any chance to put in 12

today pls?

Manager-5: Normally I put 11 .. all broker

are at 11 and we are showing 10 in

3m … but I will put 12 today if it

helps u

Trader-3: Many thx

54. Trader-3 regularly communicated with Trader A-1,

a former colleague when both worked at Bank F, to

manipulate EURIBOR submissions. As part of the agreement,

32

Trader-3 and Trader A-1 used their junior traders, Trader-

10 and Trader A-2, respectively, to make requests for

EURIBOR contributions that were beneficial to their

positions. Moreover, Trader-3 and Trader A-1 agreed to

work with traders elsewhere in efforts to manipulate the

submissions of other Contributor Panel banks.

55. On June 29, 2006, Trader-3 and Trader A-1, in an

electronic chat, agreed to request that their respective

EURIBOR submitters contribute submission to the benefit of

their trading positions and talked about how they could get

other Contributor Panel banks to do so as well:

Trader-3: today I need low 1 mth and high 3

mth

Trader A-1: me too

Trader-3: ok I’m telling my cashdesk I hope

they are on the same track

otherwise in the arse

Trader A-1: do you know other banks that we

can trust? To whom can we say low

1m?

well I can call a guy from the

cashdesk at [Bank F]

Trader-3: there was [Bank C] but not anymore

33

Trader A-1: they definitely talk to each other

I got the confirmation

56. On several occasions during 2006 and 2007,

Trader-3 and Trader A-1 attempted to move EURIBOR

submissions at multiple financial institutions to benefit

their large, accumulated trading positions.

57. For example, in the fall of 2006 Trader-3 built

large trading positions where the profitability depended on

where future EURIBORs would set and then attempted to

manipulate EURIBOR to make more money on these positions.

As early as September 7, 2006, Trader-3 told Trader A-1

about his positions and the two agreed to try to influence

their respective Contributor Panel Banks’ submissions

accordingly. They also discussed, in an electronic chat,

how they could influence other Contributor Panel banks to

do so as well in advance of October and November reset

dates:

Trader-3: on Oct and Nov I’ve got very good

fixings!

Trader A-1: ok

Trader-3: wanna know?

Trader A-1: yes

Trader-3: 65 bio

and 72 bio

34

Trader A-1: when?

Trader-3: imm both of them

Trader A-1: then for Oct, you want a high fix

right?

Trader-3: yes

Trader A-1: I have 10bn it suits me too

Trader-3: we are gonna work on them

and Nov?

Trader A-1: same as you in the other direction

Trader-3: wonderful

Trader A-1: that’s cool

Trader-3: my cash desk will be against us so

we’ll have to do some lobbying

and [Royal Bank of Scotland

(“RBS”)] is against as well

and probably [UBS] I’ll talk to

[Trader CD], he’s probably in the

same direction as us

Trader A-1: ok we have to fight hard against

[RBS], I have the feeling this fag

is an opponent to be reckoned with

. . .

Trader-3: very much

35

because his cash trader has a lot

of influence on the brokers since

he trades a lot

It’s the same in dol

Trader A-1: Exactly, that’s what they were

telling me…it’s better to tell

them in the morning so they talk

to all the brokers and they

discuss it together

58. In addition to Trader A-1, Trader-3 reached out

to Trader CD, a derivative trader at Bank C, multiple times

during late September to try to enlist his help in advance

of the October reset date. On September 27, 2006, Trader-3

indicated his preference for a high 3 month EURIBOR to

Trader CD, via electronic chat:

Trader-3: amigo

which way are u in 3mth oct fras ?

if u receiving libor, I hope u

gonna put high fixings

Trader CD: surprised how low it came out but

now I am neutral 3m fixings like

low 1s fixings n high 6 fixings

59. The next day, September 28, 2006, Trader-3

reiterated his request to Trader CD in an electronic chat:

36

Trader-3: amigo mio….hope u gonna put a high

fix if it suits ?

Trader CD: Amigo will check with cash here

think they go 42 to b honest v

neutral to this one where do u

guys see it?

Trader-3: am hopin for 425 or 43… thats

where it shud be really

60. Also on September 28, 2006, Trader-3 reached out

via electronic chat to Trader E-1, a trader at Bank E, with

whom Trader-3 occasionally communicated to request that

Trader E-1 influence Bank E’s EURIBOR submission in advance

of the October reset date:

Trader E-1: u have interest in a high or low

libors?

Trader-3: wud still love high rates mate . .

.i reckon u’ re in the same

position right?

Trader E-1: I need high libors in octobers and

lower in november

WOULD LOVE IT…do u speak to ur

guys in frankfurt for the fixings?

Later that day, the two continued:

37

Trader-3: yes and to [Trader CD] as well -

my fft will put a high fix all

allong October.. can u speak to

your cash guys if it suits u ?

Trader E-1: will try, certainly

61. Furthermore, Trader-3 spoke with Trader A-1, in

an electronic chat, on September 28, 2006 to reiterate the

request in advance of the October reset date:

Trader-3: INSIST A LOT for the 3mth fixings

Trader A-1: I’ll try [] I’m pushing for it

I’ll call [Trader G-1] and [Bank

F] too

Trader A-1: I’ll ask discretely

Trader-3: thanks

62. Meanwhile on September 27, 2006, Trader-3 also

asked that DB’s EURIBOR submitters in Frankfurt would

support his position by stating in an electronic chat:

Trader-3: Mein Herr, how are u positionned

in 3mth libor over october dates ?

I’m hoping to get high fixings, is

that ur way?

Submitter-4: DO U WANT A HIGH OCT06 FUT FIX OR

A HIGH 3ME FIX? JUST TO CLARIFY

38

Trader-3: we desperately need a HIGH 3mth

libor fix -> low october…

Submitter-4: MAYBE I AM WRONG BUT ITs NOT

EXACTLY MY VIEW FOR A HIGH 3ME

FIX. BUT WE WILL CLEARLY SUPPORT U

IN UR INT.

Later that day, Submitter-4 confirmed, “I got ur point. We

will see where the spread comes in [] Will fix high ahead

of oct06 xpiry.”

63. Likewise, Trader-3 reiterated his request to DB’s

EURIBOR submitters the next day on September 28, 2006, in

an electronic chat, only getting a partial accommodation:

Trader-3: Mein herr pleassseee todont forget

high 3mth and high 6nth libor

plsssssssss

Submitter-4: Today [Senior Manager-6] has got

the other side in 3m. We wants it

low. 6m we are indifferent. So cld

fix high as you want.

Trader-3: Thank you

64. Subsequently, however, Submitter-4 agreed to keep

Trader-3’s requests in mind moving forward. For example,

on October 2, 2006, Trader-3 made additional requests of

Submitter-4 for an extended period, noting, in an

39

electronic chat, that he was only asking for movements that

did not interfere with the Frankfurt traders’ preferences

for EURIBOR movements:

Trader-3: mein herr,

if [Senior Manager-6] fixings in

the 3m have rolled off, wud it be

possible to put a higher 3mth

fixing ?

Submitter-4: Sure,any specific date or everyday

till the oct06 fix?

Trader-3: every day please !

65. On October 4, 2006, Trader A-1 joked about

putting in a low fixing that would not suit Trader-3’s

position, and then Trader A-1 informed Trader-3 that he had

spoken to other Panel Banks about October EURIBOR

submissions as well:

Trader A-1: can you call me back when you have

your big fixing in October

So I can set it very low

Trader-3: I beg you

on the imm

Trader A-1: no worries. very low october []

40

I’ve asked [Trader G-1], [Bank F]

and here. I told them I had a 25bn

fixing

they said you’re crazy…

if they knew the truth…

Trader-3: I BEG YOU NOT TO TELL THEM

ANYTHING

66. As a final example of the interbank coordination,

Trader-3, Trader A-1, and traders at numerous other

Contributor Panel banks agreed to request favorable EURIBOR

submissions in advance of a large reset date on March 19,

2007. Similar to the Fall of 2006, Trader-3, Trader A-1,

and others accumulated large positions in the EURIBOR

derivatives market so that they stood to collectively

benefit by manipulating EURIBOR on or around March 19.

67. On the morning of March 19, 2007, one the reset

date, Trader-3 reminded Trader A-1 about their planned

coordination in an electronic chat, and Trader A-1 again

teased Trader-3:

Trader-3: don’t forget

apply some pressure for erh7

[EURIBOR march futures]

Trader A-1: 3m up to the sky

you’re crazy

41

I’m putting some pressure at lort

I’ve got to make some money

it’s got to be fixed 89.5

Trader-3: or 89

Trader A-1: 89 is like a blow job

ok we’re gonna apply some serious

pressure

1m where do you want it

Trader-3: 1m flattish

Trader A-1: ok to the sky then

68. Trader-3 then communicated his and Trader A-1’s

preference on DB’s EURIBOR submission to DB’s EURIBOR

submitters on March 19, 2007, telling Manager-5, in an

electronic chat, “dont forget us on the 3mth libor,” to

which Manager-5 replied “i am trying to push it.” In

addition to manipulating DB’s EURIBOR submission,

Submitter-4, another DB EURIBOR pool trader, informed

Trader-3, in an electronic chat, that he was “offering

aggressively” in order to further lower the upcoming three

month EURIBOR fix to benefit Trader-3’s trading positions.

To do so, Submitter-4 purposefully offered Euros at

excessively low or high rates in the market in an effort to

influence the price of cash, and thereby influence the

rates that Contributor Panel banks would submit for

42

EURIBOR. DB’s Euro pool traders occasionally engaged in

this conduct in efforts to influence an upcoming EURIBOR

fixing. In this instance, Submitter-4 acknowledged

offering cash at one full bp below where he otherwise would

have in an attempt to influence the three month EURIBOR in

a downward direction. Submitter-4 wrote to Trader-3: “No

worries, I wld offer at 88.5 anyway so its 1bp give away []

1/10 in the 3m fix is worth it.”

69. Trader-3 and the other traders discussed how they

successfully manipulated EURIBOR to benefit their trading

positions in advance of the March 20, 2007 reset date,

Trader-3 thanked DB’s EURIBOR submitters, in an electronic

chat, telling Submitter-4 “Great job on this [Submitter-4],

we can do more of this stuff,” to which Submitter-4

replied, “WE CAN MY FRIEND. WE CAN….” Submitter-4 also

described, in an email, about DB’s involvement in the

manipulation to Senior Manager-1, the global head of DB’s

GFF, informing him: “HAVE U SEEN THE 3MK FIXING TODAY? THAT

WAS AN EXCELLENT CONCERTED ACTION FFT/LDN. CHEERS.”

70. Trader-3 also wrote about the March 19, 2007

fixing with Trader K-1 of Firm K, in an electronic chat,

and Trader K-1 in turn joked about the move in EURIBOR

that day as well as the counterparties that would have lost

money from the EURIBOR moves:

43

Trader K-1: nice fixing!!!

Trader-3: indeed

Trader K-1: why so low?

Trader-3: why not !

Trader K-1: who gets f*cked on that? I assume

its all you short end guys ripping

off an end user.

71. On occasion, Trader-3 and Trader A-1 used their

junior traders, Trader-10 and Trader A-2, respectively, to

request particular EURIBOR submissions. In fact, Trader-3

and Trader A-1 planned to have Trader-10 and Trader A-2

continue to influence EURIBOR submissions at their

respective banks as agreed when they were not available, as

they noted on March 14, 2007 in an electronic chat:

Trader-3: when we go one holiday

we have to put [Trader-10] and

[Trader A-2] in touch

ok

Trader A-1: ok

of course

[Trader A-2’s] good don’t worry

72. In an earlier example, on December 27, 2006, when

Trader-3 and Trader A-1 were on vacation together, Trader

A-1 told Trader A-2 to ask Trader-10 to influence DB’s

44

EURIBOR rate to benefit Trader A-1 and Trader A-2’s trading

positions. At that time, both Trader-3 and Trader A-1 had

entered into a trade a few days earlier on December 21,

2006 where, according to Trader A-1, “we just did a 2mios

eur/bp deal” that depended, at least in part, on the

December 29, 2006 EURIBOR fixing. Then, on Friday December

29, 2006, Trader A-2 followed through on Trader A-1’s

instructions and initiated a conversation with Trader-10

also via electronic chat:

Trader A-2: today we need a low 3 month

fixing, could you tell your guys

as well if it suits you?

Trader-10: oh yes!!

Moments later, Trader-10 passed on this request, in an

electronic chat, to Submitter-4, DB’s EURIBOR submitter in

Frankfurt, who agreed to accommodate it:

Submitter-4: HIHIHIHI

Trader-10: [Submitter-4] COULD I BEG YOU FOR

A LOW 3M FIXING TODAY PLEASE..

THANT WOULD BE THE BEST XMAS

PRESENT ;)

Submitter-4: WILL MEE BE A PLEASURE, NO PROBS

WE HAVE NOTHING ON THE OTHER SIDE

HERE. WILL PUT IN 71 AT LEAST

45

MAYBE WE CLD PUT IN 70 HAVE TO

SEE….

Trader-10: S LOW AS POSSIBLE AS WE HAVE 2.5

YRDS ON IT TODAY, SO WOULD BE VERY

HELPFUL

Submitter-4: THX [Trader-10] COME BACK LATER

CIAO BIBIBIBI

C. Yen LIBOR

73. The market for derivatives and other financial

products linked to benchmark interest rates for the Yen is

global and is one of the largest and most active markets

for such products in the world. A number of these products

are traded in the United States – such as Yen-based swaps

contracts traded over-the-counter – in transactions

involving U.S.-based counterparties.

74. From at least 2006 through 2010, in London and

elsewhere, several DB employees engaged in regular efforts

to manipulate Yen LIBOR to benefit DB’s trading positions

and thereby benefit themselves. This conduct included

regular instances in which DB employees sought to influence

Yen LIBOR submissions. In furtherance of these efforts, DB

traders employed two principal and interrelated methods,

including the following:

46

a) internal requests within DB by derivatives

traders for favorable Yen LIBOR submissions; and

b) communications with a derivatives trader at

another Contributor Panel bank.

Details and examples of this conduct are set forth below.

1) Manipulation within DB of its Yen LIBORSubmissions

75. During most of the relevant period, DB traders in

DB’s GFFX unit trading products linked to Yen LIBOR were

located primarily in London. Submitter-7, a Yen pool

trader with supervisory responsibilities, along with

another Yen pool trader, Submitter-8, had primary

responsibility for submitting Yen LIBOR rates on behalf of

DB during most of the relevant period. From at least 2006

to 2007, Submitter-3 and Submitter-2, two pool traders in

London also traded derivative products tied to Yen LIBOR

and Submitter-2 had a role in the Yen LIBOR submission

process. In 2008, DB also had one Yen LIBOR derivatives

trader in London on the MMD desk, Trader-11. Trader-11

reported directly to Trader-3. Although Trader-11 belonged

to the MMD desk, he was also responsible for submitting

DB’s Yen LIBOR rate during a significant portion of 2008

and 2009. In addition, DB had a number of MMD traders in

its Tokyo subsidiary who traded derivative products tied to

47

Yen LIBOR, including Trader-13 and Trader-15, during some

of the relevant time period.

76. Instances of manipulation of Yen LIBOR

submissions within DB date back at least to 2006, and

involve DB pool and MMD traders submitting rates that would

benefit their derivative trading positions as well as Yen

LIBOR pool and MMD traders making requests of other pool

traders to submit rates that would benefit the requesting

traders’ positions. Pool traders also occasionally

solicited requests from other Yen LIBOR traders by asking

them what Yen LIBOR submissions would be most beneficial to

their trading positions. On many occasions, the DB pool

traders accommodated the derivatives traders’ requests.

Moreover, in some cases, requests would not have been

necessary because a derivatives trader with Yen positions

was also the submitter, for example when Trader-11 was the

submitter in 2008-2009.

77. Having Yen pool or MMD traders submit Yen LIBOR

and trade Yen LIBOR-based derivative products presented a

conflict of interest that contributed to the manipulation

of Yen LIBOR submissions for the benefit of the submitting

trader. For example, on September 1, 2008, Trader-11

admitted in a conversation, in an electronic chat, with Tom

Alexander William Hayes, a Yen LIBOR-based derivatives

48

trader at UBS, that Trader-11 intended to submit a Yen

LIBOR rate that would benefit his own trading position:

Trader-11: but going to put high libors today

Hayes: sure i think you guys are top in

1m anyway

Trader-11: I am mate need it high!

Likewise, on June 15, 2009, Trader-11 explained, in an

electronic chat, to Hayes that he could not set Yen LIBOR

higher because “i think my libors will be unch[anged] for a

while now . . . . . my led is quite high” and “i do not

want 3m libor up.”

78. Requests for favorable Yen LIBOR submissions

within DB primarily occurred among and between traders in

DB’s London office and its Tokyo subsidiary. A number of

these requests were made by DB pool trader Submitter-3 by

electronic chats. For example, on May 22, 2006, Submitter-

3 requested a favorable submission from Submitter-8 because

of a large upcoming reset, “i’ve got a 3m jpy libor pay set

today, could you go in low if it suits? thx,” to which

Submitter-8 replied “YES SURE.”

79. Another Tokyo-based DB MMD Yen LIBOR trader was

also active in making requests, through electronic chats,

for Yen LIBOR submissions that would benefit their trading

positions. For example, on September 29, 2006, Trader-13

49

requested favorable Yen LIBOR fixings from Submitter-8,

“Hi, [Submitter-8]. I like to have a lower 3&6 month Libor

today. [Trader-13],” to which Submitter-8 replied, “OK NO

PB.” Similarly, on October 20, 2006, Trader-13 again

requested favorable Yen LIBOR fixings from Submitter-8,

“Hi, [Submitter-8]. [Trader-13] here. Only if possible, I

like to have a higer 6month jpy LIBOR today. [] Many

thanks, [Trader-13],” to which Submitter-8 replied, “ok i

will try.” Likewise, on November 16, 2006, Trader-13

requested a favorable Yen LIBOR fixing of Submitter-8,

“only if possible, I like to have a lower 6month yen Libor

today.”2

2 During the relevant period, DB was also a member of the Contributor Panel for the Euroyen Tokyo Interbank Offered Rate (“TIBOR”). TIBOR is a reference rate overseen by the Japanese Bankers Association, which is based in Tokyo, Japan. While DB was a member of the panel, the Euroyen TIBOR Contributor Panel was comprised of 16 banks. The term “Euroyen” refers to Yen deposits maintained in accounts outside of Japan. Euroyen TIBOR is what Contributor Panel banks deem to prevailing lending market rates between prime banks in the Japan Offshore Market as of 11:00 a.m. Tokyo time. Euroyen TIBOR is calculated by discarding the two highest and two lowest submissions, and averaging the remaining rates. The published rates, and each Contributors Panel bank’s submitted rates, are made available worldwide through electronic means and through a variety of information sources. On a few occasions from 2009 until 2010, traders at DB also attempted to influence DB’s and other Contributor Panel Banks’ TIBOR submissions in order to impact the TIBOR fixing in a way that benefitted their trading positions in derivative financial products tied to TIBOR. For example, on June 19, 2009, Trader-11 reached out to Trader-15, a DB trader who traded, among other things, derivative financial products tied to TIBOR, to try and influence DB’s TIBOR contribution:

Trader-11: hum a bit of a rough question can we get DB TOK not to lower tibor contribution?

Trader-15: yeah i hear ya Trader-11: a 56 setting makes evrybody happy Trader-15: yeah we same way here

50

2) Interbank Coordination of Yen LIBOR Submissions

80. From at least as early as August 2008, Trader-11,

who was both a derivatives trader and Yen LIBOR submitter

at DB, agreed with, Hayes, a trader at another other

Contributor Panel bank to manipulate Yen LIBOR

submissions. At that time, Trader-11 and Hayes, a

derivatives trader at UBS, agreed to influence their

respective banks’ Yen LIBOR submissions to benefit the

other trader’s trading positions when doing so would not

conflict with their own trading positions. Trader-11 and

Hayes did this to benefit their respective trading books.

Furthermore, on at least one occasion, Trader-11 and Hayes

aligned their trading positions in a manner that was

intended to provide both of them an opportunity to benefit

from manipulating Yen LIBOR. Because Trader-11 was also

responsible for the submission of DB’s Yen LIBOR rate in

much of 2008 and 2009, he was able to directly manipulate

DB’s submission both for himself and on the occasions when

he agreed to accommodate Hayes’s requests.

81. As early as August 28, 2008, Trader-11 and Hayes

agreed, in an electronic chat, to coordinate their

respective banks’ Yen LIBOR submissions in order to benefit

Trader-15 then indicated that he could not influence DB’s TIBOR submission.

51

each others’ derivatives trading positions. In an

electronic chat that day, the two discussed this:

Hayes: look i appreciate the business and

the calls

we should try to share info where

possible

also let me know if you need fixes

one way or the other

Trader-11: sure sorry mate have to go too

busy on many things . . .

Hayes: and i’ll do the same if you have

any joy with you setters

no prob

Trader-11: good evening

82. From 2008 until approximately September 2009

Hayes periodically made requests of Trader-11 to move DB’s

Yen LIBOR submissions in a particular direction (i.e., up

or down) in order to benefit Hayes derivative positions,

and Trader-11 agreed to do so. For example, on September

18, 2008, the two discussed the following, in an electronic

chat:

Hayes: you got any ax on 6m fix tonight?

Trader-11: absolutely none

but i can help

52

Hayes: can you set low as a favour for

me?

Trader-11: done

Hayes: i’ll return favour when i can

just ask

have 75m m jpy a bp

tonight

Trader-11: np

The next day, on September 19, 2008, Hayes offered to raise

the rate he would pay Trader-11 on a trade, and explained

his motivation for doing so: “in fact cause you helped me

on 6m yday.”

83. Despite the fact that Trader-11 agreed to

manipulate DB’s Yen LIBOR submissions with Hayes, as early

as 2008, Trader-11 recognized that doing so was illegal as

shown in a telephone conversation with an unknown caller:

Trader-11: `Um…it was not…not that big movement in

the cash and [UBS] is manipulating it

at the moment to get it very low.

Unknown Caller (UC): You are telling me that the [UBS]

is manipulating right?

Trader-11: Yeah. I mean yesterday [Hayes] came to

me, ok, and said “hello mate,” “hello,”

“I’ve got a big reset, that was

53

yesterday, and about 750, uh…75 million

yen dv01, can you put it low?”

…

Trader-11: And [Hayes] said, ‘can you put it low?’

I said, ‘yeah, ok.’ At the end…at the

end of the day, [laughter] it went down

[unintelligible] bps when I think cash

is better bid.

UC: Fucking hell.

Trader-11: And he’s doing that with the 16 banks

[laughter].

UC: That means [UBS] is asking 16 banks

to…to…to ask you guys to put it high.

Trader-11: Maybe not…not 16 banks, but you know,

if he knows eight banks, that’s enough.

…

Trader-11: Yeah this is why the LIBOR came off

yesterday. For no other reason.

…

Trader-11: Yeah, yeah, I know, but…because it was

manipulated by Hayes

UC: Fucking hell, manipulating, Wow!

…

UC: Is that...is that legal or illegal?

54

Trader-11: No, that’s illegal. No, that’s

illegal….

84. Moreover, within two weeks of helping Hayes,

Trader-11 told Submitter-8, in an electronic chat, on

September 30, 2008 about how Hayes “call[ed] [Trader-11]

directly to beg [Trader-11] to put a low 6m libor” 10 days

ago, to which Submitter-8 replied, “you’re kidding

me??????” Submitter-8 then remarked, “that’s not very

kosher…” to which Trader-11 replied, “no, not really.”

85. Despite knowing that manipulating LIBOR was

illegal, Trader-11 continued to agree with Hayes to

manipulate DB’s LIBOR submissions, as seen in a May 2009

electronic chat exchange:

Hayes: cld you do me a favour would you

mind moving you 6m libor up a bit

today, i have a gigantic fix

i am limit short

can’t sell anymore

just watch

Trader-11: i can do taht

Hayes: thx

The next day, Trader-11 confirmed that this Yen LIBOR

submission had been beneficial to Hayes:

Trader-11: u happy with me yesterday?

55

Hayes: thx

86. In and around July and August of 2009, Trader-11

and Hayes agreed to influence the six month Yen LIBOR

fixing by manipulating their and other Contributor Panel

banks’ six month Yen LIBOR submissions. The plan involved

to increase the six month Yen LIBOR fixing higher up until

August 11, 2009, and then suddenly lowering their and other

Contributor Panel banks’ submissions, all to the benefit of

their coordinated trading positions. As early as July 6,

2009, Trader-11 and Hayes began talking about their plan,

in an electronic chat, to influence the six month Yen LIBOR

rates and about when they would begin:

Trader-11: Hi

Hayes: when is your first fix you need

low 6m for?

talking to my guys about when we

start lowering it

not yet obviously

but just so i can plan ahead

Trader-11: nottoo fuss to be fair

Hayes: ok they have some fixes till eom

so we will drop it

31st

is that ok or is that too late? []

56

Trader-11: ok np

87. On July 14, 2009, the two continued discussing

their effort, in an electronic chat, to manipulate DB’s six

month Yen LIBOR submission and how doing so would mutually

benefit their trading positions by, at that stage of the

plan, keeping their submissions higher:

Hayes: if you cld hold your 6m fix till

the eom wld be massive help

Trader-11: I put higher today

Hayes: thx

Trader-11: suist me too

That same day, Hayes told Trader-11 how he would get UBS

and other Contributor Panel banks to help lower the six

month Yen LIBOR fix in the coming weeks as part of their

plan, “just fyg after eom will get 6m down a lot, we will

move from top to bottom, and so will [Bank H].” Later, on

July 21, 2009, Hayes informed Trader-11 that he had

accumulated a “huge” position in anticipation of lowering

the six month Yen LIBOR and that he needed Trader-11 to

take on some of his risk through additional trades, to

which Trader-11 agreed noting, “that is fair, ok we done.”

Hayes’s and Trader-11’s sharing of risk had the effect of

aligning Hayes’s and Trader-11’s trading positions in

advance of their plan concerning the six month Yen LIBOR.

57

By July 23, 2009, Hayes and Trader-11 finally confirmed

that they would make a “massive push” to lower their

respective Contributor Panel banks’ six month Yen LIBOR

submissions by “aug 11th.” In the following days and weeks,

Trader-11 proceeded to lower DB’s six month Yen LIBOR

submission by large amounts. Finally, on August 11, 2009,

Trader-11 explained some of his earlier plans concerning

the six month Yen LIBOR to Trader K-2, a trader at Firm K,

noting “between u and me 6m libor is going to go very low

in sep” and “[Hayes] will drop and teh others when back

from holiday.”

88. Between 2008 and 2009, Trader-11 would also

occasionally tell Hayes, over electronic chat, what rates

DB was going to submit or ask Hayes if he had a preference

for where that rate should be. For example, on January 15,

2009, Trader-11 asked Hayes, “where should i put my

libors,” and proceeded to list potential LIBOR submissions.

Similarly, on May 13, 2009, Trader-11 informed Hayes that

“we are dropping our [USD] libor 20 bp to 70.”

89. Trader-11 continued to agree with Hayes, over

electronic chat, to coordinate favorable Yen LIBOR

submissions after Hayes left from UBS to Bank C in

approximately September 2009. For example, on March 26,

58

2010, Hayes requested that Trader-11 manipulate DB’s LIBOR

submissions:

Hayes: you got much in 3m libor in dec

?

Trader-11: nothing

Hayes: ok i really gonna need 3m lib up a

bit in dec

have massive imm fix

vs [Bank J]

Trader-11: hum np

Hayes: thanks

Trader-11: we have time by then

Hayes: anything i can help with let me

know

Such requests continued up until approximately June 2010

when Trader-11 informed Hayes that he no longer had any

“influence or control” over Yen LIBOR submissions and that

he did not “want to be involved.”3

3 Interdealer Brokers, such as Broker A and Broker B, track bids and offers of cash in the market and assist derivatives and money market traders in arranging transactions between financial institutions and other market participants. As a result of their positions as intermediaries, some brokers developed relationships with traders and LIBOR submitters at various Contributor Panel banks, often possessed knowledge of interbank money market activity, and as a result frequently communicated with derivatives traders and LIBOR submitters at the Contributor Panel banks.

DB Yen LIBOR traders occasionally communicated with interdealer brokers about Yen LIBOR submissions. For example, on July 10, 2009, Submitter-7 asked Broker A-1, an interdealer broker at Broker A, in an

59

D. CHF LIBOR

90. On many occasions from at least 2007 through at

least2010, DB CHF LIBOR derivatives traders in London, and

elsewhere, asked DB pool traders to submit CHF LIBOR rates

to benefit their trading positions in derivative products

tied to CHF LIBOR. The DB pool traders agreed to

accommodate many of these requests.

91. During most of this period, DB traders within

DB’s GFFX unit trading products linked to CHF LIBOR were

primarily located in London and Frankfurt. DB’s CHF LIBOR

submission was originally made by Submitter-7 in London,

but the responsibility moved over to DB’s GFFX unit in

Frankfurt in approximately 2004. After 2004, DB’s CHF

LIBOR submitter was Submitter-9, a pool trader in Frankfurt

who reported to the head of GFF in continental Europe, at

first Senior Manager-6, and later Manager-5. At the same

time, Trader-9, another pool trader in Frankfurt was also

involved in submitting DB’s CHF LIBOR rates. Beginning in

June 2010, another junior pool trader in Frankfurt, Trader-

16, began trading financial products tied to CHF LIBOR and

began submitting DB’s CHF LIBOR submission. Until at least

electronic chat, “3 mth libor today ? . . . any chance to get it lower or some resistance . . .” to which Broker A-1 replied, “ill try prob Monday can get it lower.” Similarly, on September 26, 2008, Trader-11 asked Broker B-1, an interdealer broker at Broker B, in an electronic chat, “Morning libor to the roof today please,” to which Broker B-1 replied, “yeah looks that way dude.”

60

2007, Trader-20, a DB repo trader in GFFX in London traded

derivative products tied to CHF LIBOR as well. Likewise,

from at least August 2008 to March 2010, Trader-11, an MMD

trader in London who reported to Trader-3, traded

derivative products tied to CHF LIBOR in London.

92. Evidence of manipulation of CHF LIBOR submissions

dates back at least to 2007 and involves DB pool traders

making CHF LIBOR submissions that would benefit their

derivative trading positions, as well as pool and MMD

traders requesting CHF LIBOR submissions that would benefit

the requesting traders’ positions. Pool traders also

occasionally solicited requests from other CHF LIBOR

traders by asking them what CHF LIBOR submissions would be

most beneficial to their trading positions. In particular,

the CHF LIBOR setters would maintain a spreadsheet of what

rates they had submitted and intended to submit on behalf

of DB. This spreadsheet was often circulated to other DB

traders in advance of DB’s CHF LIBOR submission to the BBA

allowing those traders to request that the submission be

moved to influence the CHF LIBOR fixing to benefit their

trading positions. In 2009, Submitter-9 told Trader-11 in

a telephone call, “I now have libor contribution simulation

in my spreadsheet.” On many occasions, the DB pool trader

accommodated the derivatives traders’ requests.

61

Additionally, DB’s CHF LIBOR pool and MMD traders

participated in weekly GFFX-wide phone calls to discuss the

market, risk, and their trading positions.

93. This scheme to manipulate CHF LIBOR became more

frequent when Trader-11 began trading CHF LIBOR-based

derivative products on behalf of DB from 2008 through 2010.

During that time, Trader-11 regularly communicated with

Submitter-9, and on occasion Trader-9, about submitting CHF

LIBOR submissions that were intended to benefit Trader-11’s

trading positions. Soon after he started, Trader-11

quickly let Submitter-9 know that he was trading these

financial products and that the two could work together

manipulate DB’s CHF LIBOR submissions. On July 25, 2008,

Trader-11 and Submitter-9 were introduced and discussed

briefly, in an email, how this scheme would operate:

Trader-11: Hello I trade CHF derivatives in

London what are you putting for

libors today please?

Submitter-9: Hi mate welcome in one of the most

interesting currency market heard

out of the market that there is

sombody at DB LDN now again

trading CHF derivatives didnt

check so far but probably going

62

for 27 in the 1mth and 75 in the

3mths In case you have aynthing

special let me know rgds

[Submitter-9]

94. After that, the two regularly spoke about

influencing DB’s CHF LIBOR submissions to benefit trading

positions. At times, they also discussed whether they

could have a greater influence on the CHF LIBOR fixing by

submitting at the low end of the Contributor Panel banks

whose submissions would be averaged by the BBA or by

submitting so low that DB would be dropped out of the

calculation altogether. For example, on September 25,

2008, the two agreed, in an electronic chat, to move DB’s

rate for Trader-11’s benefit with Trader-11 explaining the

motivation for his two requests. In doing so, they also

pushed for specific target CHF LIBOR submissions:

Submitter-9: hi gd morning mate…in case it

helps u my libor forecast: 1m 2.63

2m 2.70 3m 2.82 6m 2.98 9m 3.10

12m 3.235

Trader-11: ok many thanks

can you put a high 3m please?

Submitter-9: sure 83?

Trader-11: many thanks

63

really need low 1 month today…

just for tpday…

Submitter-9: wud do 61 if you agree…problem is

not to quote too low to be deleted

in the calculation process…??

Crazy these markets…..hope ur fine

with the fixing

Trader-11: yes it is perfect was paying a lot

of 1m today glad it is out of the

way am short 3m but want to rec 3s

now

95. Similarly, on October 23, 2008, the two spoke

about moving DB’s CHF submissions to benefit Trader-11’s

trading positions and revisited their discussions, in an

electronic chat, about the optimal way to impact the fixing

to benefit one’s trading positions:

Trader-11: where do you see 1m libor today?

Submitter-9: gd question lower again I will

go again for 2.50 with a fix at

2.60-62

Trader-11: cam you put a very low 1 month

please

Submitter-9: sure wnatever suits u but to be

honest lower than 2.50 wud mean we

64

r off the calculation anyway so

having no effect on the fix

Trader-11: fine if we are off the calculation

it is always better than we are in

To get libor your way you always

need to be off teh calculation

Submitter-9: to show the direction i totally

agree….but in case u have a refix

i wud say its better to be in the

calc on the low side

Trader-11: no we had a chat with [Trader-3]

about that and we do not think so

Maybe he is wrong!!!

If you are un menas you increase

the libor no?

Submitter-9: it depends what u expect all the

other to quote….on the day of ur

refix its better to be the lowest

in the calc to bring libor down,

no?

But to make sure risk on the 1m

libor today clearly on the

downside, means coming more down

to 2.50 area..maybe all the banks

65

quoting unchgd high 1m libor

yesterday might go down quite a

lot today

Trader-11: good

Submitter-9: will go 38 in thw 1m fixing

Trader-11: Thank you

E. GBP LIBOR

96. From at least 2005 through 2010, London-based

pool traders regularly made GBP LIBOR submissions that

benefited trading positions in derivative products tied to

GBP LIBOR. These submissions by DB’s GBP pool traders

benefited their own positions. During this same period,

DB’s GBP LIBOR submitters on occasion received requests

from the bank’s GBP derivatives traders, including Trader-

17 and Trader-18.

97. During most of this period, responsibility for

DB’s GBP LIBOR submission rested primarily with pool

traders Trader-18 and Submitter-10. Over time, Trader-18’s

job evolved from being in charge of a cash book into

managing a sizeable derivatives book the profitability of

which was based on products primarily tied to GBP LIBOR.

Also during this time and beginning in at least 2007,

Trader-18 became Submitter-10’s supervisor. Consequently,

Submitter-10 knew Trader-18’s derivatives positions and had

66

them in mind when setting DB’s GBP LIBORs and submitted

rates that favored Trader-18’s derivatives positions.

F. DB Management

1) A DB Senior Manager’s Awareness of the Scheme

98. Senior Manager-1, a senior manager and the head

of GFF in London, was present when DB traders and

submitters coordinated LIBOR submissions. Senior Manager-1

was the head of the primary business unit at DB engaged in

the manipulation of LIBOR submissions and was present on

occasions when Submitter-1 received requests to manipulate

DB’s USD LIBOR submission.

99. Senior Manager-1 also received communications

from the derivatives traders in London, and the derivatives

traders and EURIBOR submitters in Frankfurt communicated

fixing interests. For example, on October 10, 2008,

Manager-5 sent an email to Senior Manager-1 informing

Senior Manager-1 of fixing coordination between Trader-3

and himself. Manager-5 wrote, “Hi [Senior Manager-1]. How

are YOU? I talked to [Trader-3] about the fixings for next

week. Did he passed it to you???

100. Similarly, in March 2007 Submitter-4 described,

in an email, about DB’s involvement in EURIBOR manipulation

to Senior Manager-1 informing him: “HAVE U SEEN THE 3MK

67

FIXING TODAY? THAT WAS AN EXCELLENT CONCERTED ACTION

FFT/LDN. CHEERS.”

101. As a part of Senior Manager-1’s performance

evaluation of Trader-3 in 2004, Senior Manager-1 encouraged

Trader-3 to “Increase relationship with FFT MM to control

the short date settings with cash and derivatives.”

2) DB’s Poor Compliance Culture

102. Having DB’s USD LIBOR pool traders both submit

LIBOR and trade financial products tied to USD LIBOR

presented a conflict of interest that contributed to the

manipulation of USD LIBOR submissions for the benefit of

the submitting traders. This conflict of interest was not

entirely or sufficiently resolved until March 2012—more

than two years after regulators began to inquire about the

LIBOR setting process at Contributor Banks.

103. Moreover, certain DB managers prioritized making

money above compliance and business ethics. For example,

in the year 2008 Trader-3 made approximately 90 million

pounds sterling from a percent-of-revenue performance

contract. That year, DB did not perform its standard

evaluation for traders of Trader-3, which nominally would

have included topics such as culture and behavior.

104. Managers at DB who were regularly involved in and

aware of manipulation, were often promoted to higher

68

managerial levels. For example, Manager-1, who was

regularly involved in influencing DB’s USD LIBOR submission

in London, rose to the head of GFF in London during the

relevant period. Likewise, Trader-3, who manipulated and

agreed to manipulate DB and other Contributor Panel banks’

EURIBOR submissions, was elevated to the global head of

DB’s MMD desk during the relevant period. Additionally,

Manager-5, who was involved in influencing DB’s EURIBOR

submission in Frankfurt and overseeing this process, was

promoted to the head of GFF in Frankfurt during the

relevant period.

105. DB did not recognize other warning signs relating

to possible trader misconduct on the MMD desk. In the

beginning of 2009, a group of senior managers led by Senior

Manager-5 reviewed the EURIBOR trading desk and did not

find any manipulation. In the Spring of 2009, Senior

Manager-2 had the bank’s internal Business Integrity Review

Group (BIRG) review the desk because of the massive profits

the desk made in 2008, and in particular that Trader-3

made. The final BIRG report revealed cultural and conduct

issues, including issues relating to Trader-1, Trader-3,

and Trader-17. Despite the fact that the attempts to

manipulate LIBOR and EURIBOR were occurring openly over

written communications and in verbal requests, were known

69

to a number of key managers at the bank, and were a natural

result of having derivatives traders make submissions for

benchmarks referenced in products actively traded by

themselves or their direct supervisors, the BIRG review

failed to identify any misconduct involving LIBOR and

EURIBOR, and no disciplinary or remedial actions were

taken.

3) The Implications of the DB Swaps Traders Requests

106. When DB derivatives traders made requests of DB

pool traders in order to influence DB’s benchmark interest

rate submissions, and when the pool traders accommodated

those requests, the manipulation of the submissions

affected the fixed rates on various occasions.

107. Likewise, when DB derivatives traders agreed with

traders to influence the submissions of other Contributor

Panel banks – either by (1) seeking and receiving

accommodation from their counterparts at such banks, or (2)

influencing the submissions from other banks with the

assistance from cash brokers who disseminated

misinformation in the marketplace – the manipulation of

those submissions affected the fixed benchmark rates on

various occasions.

108. Indeed, the purpose of this activity was to

manipulate benchmark submissions from DB and other banks to

70

influence the resulting fixes and thus to have a favorable

effect on the derivatives traders’ trading positions.

Because traders’ compensation was based in part on the

profit and loss calculation of the trading books,

derivatives traders’ requests were intended to benefit

their compensation as well.

109. Because of the high value of the notional amounts

underlying derivatives transactions tied to LIBOR and

EURIBOR, even very small movements in those rates could

have had a significant positive impact on the profitability

of a trader’s trading portfolio, and a correspondingly

negative impact on their counterparties’ trading positions.

110. DB entered into interest rate derivatives

transactions tied to LIBOR and EURIBOR – such as

derivatives and forward rate agreements – with

counterparties to those transactions. Some of those

counterparties were located in the United States. Those

United States counterparties included, among others, asset

management corporations, business corporations,

universities, non-profit organizations, and insurance

companies. Those counterparties also included banks and

other financial institutions in the United States or

located abroad with branches in the United States.

71

111. In the instances when the published benchmark

interest rates were manipulated in DB’s favor due to DB’s

manipulation of its own or other banks’ submissions, that

manipulation benefitted DB derivatives traders, or

minimized their losses, to the detriment of counterparties

located in Connecticut and elsewhere, at least with respect

to the particular transactions comprising the trading

positions that the traders took into account in making

their requests to the rate submitters. Certain DB pool and

MMD derivatives traders who tried to manipulate LIBOR and

EURIBOR submissions understood the features of the

derivatives products tied to these benchmark interest

rates; accordingly, they understood that to the extent they

increased their profits or decreased their losses in

certain transactions from their efforts to manipulate

rates, their counterparties would suffer corresponding

adverse financial consequences with respect to those

particular transactions.

112. When the requests of derivatives traders for

favorable LIBOR and EURIBOR submissions were taken into

account by the DB pool traders, DB’s rate submissions were

false and misleading. Those false and misleading LIBOR and

EURIBOR contributions affected or tended to affect the

value and cash flows of derivatives contracts, including

72

interest rate swap contracts. Moreover, in making and in

accommodating these requests, the derivatives traders and

submitters were engaged in a deceptive course of conduct in

an effort to gain an advantage over their counterparties.

As part of that effort: (1) DB pool and MMD traders

submitted and caused the submission of materially false and

misleading LIBOR and EURIBOR contributions; and (2)

derivatives traders, after initiating and continuing their

effort to manipulate LIBOR and EURIBOR contributions,

negotiated and entered into derivative transactions with

counterparties that did not know that DB employees were

often attempting to manipulate the relevant rate.

III.

DB’S ACCOUNTABILITY

113. DB acknowledges that the wrongful acts taken by

the participating employees in furtherance of the

misconduct set forth above were within the scope of their

employment at DB. DB acknowledges that the participating

employees intended, at least in part, to benefit DB through

the actions described above. DB acknowledges that due to

this misconduct, DB, including the DB branches or agencies

in the United States, have been exposed to substantial

financial risk, and partly as a result of the penalties

imposed by this Deferred Prosecution Agreement and under

73

agreements reached with other government authorities, has

suffered actual financial loss.